re: Estate Tax Insurance

what company is offering this insurance plan?

Using life insurance proceeds to pay an estate tax bill is a perfectly fine estate planning tool, especially if the assets are not very liquid.

There's a lot of old ILITs hanging around from when the estate tax exemption was less than a million dollars.

With the higher exemption and spousal portability, the odds of actually having an estate tax bill are lower than ever before.

So the question I would have are...

1) Is there any chance of a taxable estate?

2) If there is, what planning techniques can we employ to reduce, or eliminate that taxable estate?

I'm assuming your inlaws met with a life insurance salesman (estate planner my arse). A life insurance salesman is not going to be able to answer those two questions.

If after legitimate estate planning has been conducted, there still exists a potential estate tax bill, then looking at life insurance as a funding mechanism is a valid strategy.

You do what trump did. Set up two shell companies one I. Your name and one in your parents. Then have your shell company sell things to your parents shell company for exorbant prices to avoid that 50% estate tax. That way you just get hit with the tax of owning a business. Winning.

(no message)

Precisely, the size of the estate can be worth millions but that doesn’t mean the cash for the tax is readily available

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what company is offering this insurance plan?

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I will ask her in the morning.

Hire a lawyer, Costanza. You need to protect Prickly Pete.

This guy has some knowledge. Also, it depends on what kind of trust is set up as well as the timeframe on when that estate is set up. For example, if an irreovcavle trust is set up and the person dies within 3 years, it goes against the estate.

I’m a big fan of the life insurance policy to pay the estate tax, especially if it is a sizable tax.

This is what I do for a living. If their assets are well under $6 million there is really no need to purchase insurance and put it in an ILIT. When the exemption sunsets it'll be back down to 5.49 million per person -- 11 million per couple.

I would recommend a good trust for beneficiaries so that assets can be protected from beneficiaries' creditors (if drafted properly).

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The classic example is Joe Robbie, original owner of the Miami Dolphins. Upon his death, his heirs/family were forced to sell the Dolphins because they couldn't afford the estate taxes. Had they purchased a life policy, the death benefit would have paid the taxes, and the heirs/family would have retained ownership of the Dolphins.

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They would have had multiple options outside of just life insurance. I don’t know the details here at all, but it’s rarely that simple.